Technical Analysis Applications in the Global Currency Markets

by Luca, Cornelius (Author)

• ISBN13: 9780735201477
• ISBN10: 0735201471
• Format: Hardcover
• Copyright: 2000-09-01
• Publisher: Penguin Group USA

Summary

With its explosive recent growth - and 1.4 trillion daily turnover - global currency trading offers staggering rewards for those with the knowledge to capitalize on it. This guide provides and easy-to-follow roadmap. In it, foreign currency market expert Cornelius Luca shows beginners and experienced traders alike how to use technical analysis - charts and charting - to cash in on these enormous opportunities.

Table of Contents

PART 1 Trends and Major Chart Formations	1	(106)
Fundamental Principles of Technical Analysis	3	(54)
Technical Analysis on Balance	4	(6)
Pros	4	(1)
And Cons	5	(5)
Is the Past a Guide to the Future?	10	(1)
Dow Theory	11	(1)
The Importance of Cycles	12	(2)
Types of Charts: A Comparison	14	(11)
Line Chart	14	(7)
Bar Chart	21	(1)
Candlestick Chart	22	(1)
Point and Figure Chart	23	(2)
Arithmetic and Logarithmic Scale	25	(2)
Volume and Open Interest	27	(3)
Trend	30	(2)
Trend Lines	32	(10)
Trading Signals for Trend Lines	35	(7)
The Channel Line	42	(3)
Trading Signals for Channel Lines	43	(2)
Support and Resistance Levels	45	(1)
Speedlines	45	(4)
Andrews' Pitchfork	49	(1)
The Importance of the Long-Term Charts	50	(1)
Percentage Retracements	51	(6)
Trend Reversal Patterns	57	(25)
Price Structure	57	(1)
Head and Shoulders and Inverted Head and Shoulders	58	(5)
Head and Shoulders	58	(4)
The Inverted Head and Shoulders	62	(1)
Double Top and Double Bottom	63	(6)
Double Top	63	(5)
Double Bottom	68	(1)
Triple Top and Bottom	69	(4)
Triple Top	69	(1)
Triple Bottom	69	(4)
V-Formation (Spike)	73	(1)
Rounded Top and Bottom	74	(3)
Diamond Formation	77	(1)
Rectangle Rerversal	77	(5)
Continuation Patterns	82	(25)
Price Structure	82	(1)
Flag Formation	82	(3)
Bullish Flag	83	(1)
Bearish Flag	84	(1)
Pennant Formation	85	(5)
Bullish Pennant	85	(2)
Bearish Pennant	87	(3)
Triangle Formation	90	(10)
Symmetrical Triangle	90	(2)
Ascending Triangle	92	(3)
Descending Triangle	95	(3)
Expanding, or Broadening, Triangle	98	(2)
Wedge Formation	100	(2)
Continuation Rectangle Formation	102	(5)
PART 2 Types of Charts	107	(102)
Formations Unique to Bar Charts for Futures	109	(14)
Gaps	110	(9)
Common Gaps	111	(3)
Breakaway Gaps	114	(2)
Runaway, or Measurement, Gaps	116	(1)
Exhaustion Gaps	117	(2)
Island Reversal	119	(1)
Key Reversal Day	120	(1)
The Four-Week Rule	121	(1)
Upthrust and Spring	122	(1)
Point and Figure Charting	123	(39)
Price Structure	123	(4)
Point and Figure Charting Formations	127	(2)
Simple Formations	127	(1)
Breakout of a Triple Top	128	(1)
Breakout of a Triple Bottom	129	(13)
Breakout of a Spread Triple Top	130	(2)
Breakout of a Spread Triple Bottom	132	(2)
Ascending Triple Tops	134	(1)
Descending Triple Bottoms	135	(2)
Upward Breakout of a Bullish Resistance Line	137	(1)
Downward Breakout of a Bearish Support Line	137	(1)
Downward Breakout of a Bullish Support Line	138	(2)
Upward Breakout of a Bearish Resistance Line	140	(2)
Failures in Point and Figure Charting	142	(2)
Common Formations in Point and Figure Charting	144	(18)
Trend Reversal Formations	144	(9)
Trend Continuation Formations	153	(9)
Candlestick Charting	162	(47)
Bullish Signals	164	(8)
Daily White Candlesticks	164	(1)
Two-Day Bullish Signals	164	(8)
Bearish Signals	172	(3)
Daily Black Candlesticks	172	(3)
Two-Day Bearish Signals	175	(10)
Dark Cloud Cover (Kabuse Candlestick)	175	(1)
Atekubi (Ate) Candlestick	176	(2)
Irikubi Candlestick	178	(1)
Sashikomi Candlestick	178	(3)
Bearish Engulfing Pattern (Bearish Tsutsumi)	181	(1)
Bearish Tasuki Candlestick	181	(3)
Downside Gap Tasuki Candlestick	184	(1)
Reversal Signals	185	(3)
Daily Reversal Pattern	185	(3)
Complex Trading Signals	188	(13)
Sanzan (Three Mountains)	190	(2)
Sansen (Three Rivers or The Three River Evening Star)	192	(4)
Sanpei (Three Parallel Candlesticks)	196	(2)
Sanpo (Three Methods)	198	(2)
Sanku (Three Gaps)	200	(1)
``Wait ans See'' Signals	201	(8)
Harami Candlestick	202	(2)
Hoshi (Star) Candlestick	204	(1)
Kenuki (Tweezers) Candlesticks	204	(5)
PART 3 QUANTITATIVE METHODS OF ANALYSIS	209	(122)
Moving Averages	211	(22)
Price Structure	211	(1)
Simple Moving Average	212	(1)
Linearly Weighted Moving Average	213	(1)
Exponentially Smoothed Moving Average	214	(2)
How Many Moving Averages to Use and for What Periods	216	(1)
Two Moving Average Combination or Double Crossover Method	216	(1)
Japanese Crosses	217	(4)
Three Moving Average Combination or Triple Crossover Method	221	(1)
Donchian's 5- and 20-Day Moving Averages Method	221	(5)
Basic Rule A	225	(1)
Basic Rule B	225	(1)
Basic Rule C	225	(1)
Basic Rule D	225	(1)
Price and Time Filters	226	(7)
Envelope Model	226	(2)
High-Low Band	228	(1)
Bollinger Bands	228	(3)
Keltner Channels	231	(2)
Oscillators	233	(24)
General Rules	233	(4)
Momentum	237	(3)
Rate of Change (ROC)	240	(1)
Commodity Channel Index (CCI)	241	(1)
Specific Trading Signals for the CCI	242	(1)
Stochastics	243	(1)
Specific Trading Signals for Stochastics	244	(3)
Extreme Values	244	(1)
The Intersection of the %D and %K Lines	245	(1)
The Hinge	246	(1)
Slow Stochastics	246	(1)
Williams %R	247	(1)
The Relative Strength Index (RSI)	248	(3)
Moving Averages Oscillators	251	(3)
Trading Signals for Moving Averages Oscillators	252	(1)
Moving Average Convergence/Divergence (MACD)	252	(1)
Trading Signals for the MACD	253	(1)
Oscillator Combinations	254	(3)
Other Indicators	257	(25)
Parabolic System, or SAR	257	(2)
Directional Movement Index (DMI)	259	(5)
Market Profile®	264	(4)
On Balance Volume (OBV)	268	(2)
Volume Accumulation Oscillator (VAO)	270	(1)
Sequential Analysis®	271	(2)
Setup	271	(1)
Intersection	272	(1)
Countdown	272	(1)
Range Expansion Index (REI)™	273	(2)
TD Arcs™	275	(2)
Triple Exponential Smoothing Oscillator (TRIX)	277	(1)
Swing Index	278	(1)
Accumulation Swing Index (ASI)	279	(3)
W. D. Gann Analysis	282	(10)
Percentage Retracements	282	(1)
Geometric Angles	283	(4)
The Cardinal Square	287	(1)
Geometric Forms	287	(4)
The Squaring of Price and Time	291	(1)
The Elliott Wave	292	(19)
Basics of Wave Analysis	293	(3)
Characteristics of the Waves	296	(2)
Impulse Waves---Variations	298	(2)
Extensions	298	(1)
Diagonal Triangles	299	(1)
Failures or Truncated Fifths	300	(1)
Corrective Waves	301	(7)
Zigzags	302	(1)
Flats	303	(2)
Triangles	305	(2)
Combined Structures	307	(1)
Fibonacci Analysis	308	(3)
Now What?	311	(20)
Technical Tools for Each Time Frame	313	(4)
Long-Term Analysis	313	(2)
Medium-Term Analysis	315	(1)
Short-Term Analysis	316	(1)
Intraday Analysis	316	(1)
Technical Tools for Each Type of Market	317	(3)
Trading Market	317	(2)
Dynamic Market	319	(1)
Typical Problems in Technical Analysis	320	(5)
Lack of Confirmation	320	(1)
Anemic Breakouts of the Currency Through Trend and Channel Lines	321	(1)
Anemic Breakouts of the Currency Through Support and Resistance Lines	322	(1)
Ambiguous Patterns	322	(1)
Unreasonable Price Objectives	323	(1)
Wrong Identification of a Pattern	323	(1)
Anemic Breakout of Oscillators Through the Zero Line	323	(1)
Anemic Crossovers between Moving Averages or Oscillators	324	(1)
Chart Combinations	325	(2)
Where to Go from Here	327	(4)
Bibliography	331	(2)
Glossary	333	(20)
Index	353